May 14, 2022
  • May 14, 2022

More than 100,000 Cubans now use cryptocurrency (report)

By on May 8, 2022 0

Many Cubans are now using cryptocurrencies as an alternative medium of exchange due to limitations imposed by US sanctions on the country’s traditional payment rails. More than 100,000 Cubans are said to use digital assets, largely thanks to the mobile internet that reached the country just three years ago.

Cuba’s crypto economy

NBC News recently interviewed Nelson Rodriguez – a Cuban cafe owner who now accepts both Bitcoin and Ethereum for payments. He said he believed in the “philosophy” of crypto – often associated with free market ideals, property rights, borderlessness and resistance to censorship.

Cuba, on the other hand, is ruled by a communist party and citizens cannot use internationally accepted debit and credit cards due to US sanctions. Paypal, Revolut and Zelle are all banned in the region.

But no cryptocurrency: the Cuban central bank has announced that it will start issue licenses to virtual asset service providers this month. Eight months earlier, the Cuban president would have been examining the legalization of cryptocurrencies for payments.

As Rodriguez explained, digital currencies mean that payment service providers are no longer needed for commerce, leaving their bans negligible.

The technology is revolutionary for the region, given that international banks that process it can be fined hundreds of millions of dollars. As such, even if the Cuban government has the money for a trade, making payments remains a huge challenge.

Dr. Emily Morris, an economist at University College London, said it’s no surprise to see the Cuban population turning to crypto. “If you can transact directly between two parties without going through a bank, then that would be great,” she said.

NBC also interviewed Ernesto Cisneros, a Cuban musician who turned to NFTs after his business collapsed due to Covid 19 pandemic restrictions. He now stores his music, videos and photos on Channel and sells them online for cash.

A penalty killer?

The role of cryptocurrency in circumventing sanctions has come under intense scrutiny from governments since the United States sanctioned Russia in February. Although small Cuban cafes can circumvent these restrictions using cryptography, Chainalysis complaints that it is not viable for alternative national governments.

Binance CEO Changpeng Zhao also declared that using crypto for sanctions is a myth. “Crypto is too traceable,” he said. “Governments around the world are getting better and better at tracking crypto transactions.”

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